Clayton Hinton v. Nate Rolison , 2015 Miss. LEXIS 506 ( 2015 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2014-CA-00412-SCT
CLAYTON HINTON
v.
NATE ROLISON, INDIVIDUALLY; NATE
ROLISON d/b/a LINCOLN ROAD AUTOPLEX;
AND CREDIT ACCEPTANCE CORPORATION
DATE OF JUDGMENT: 02/26/2014
TRIAL JUDGE: HON. ANTHONY ALAN MOZINGO
TRIAL COURT ATTORNEYS: BRADLEY M. GLAZE
L. CLARK HICKS
CARROLL H. INGRAM
JOHN G. CORLEW
STEPHEN T. MASLEY
COURT FROM WHICH APPEALED: LAMAR COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: R. LANE DOSSETT
L. CLARK HICKS, JR.
ATTORNEYS FOR APPELLEES: JOHN G. CORLEW
CARROLL H. INGRAM
JENNIFER INGRAM WILKINSON
MARK H. TYSON
STEPHEN T. MASLEY
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED - 10/08/2015
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE WALLER, C.J., LAMAR AND PIERCE, JJ.
LAMAR, JUSTICE, FOR THE COURT:
¶1. Clayton Hinton invested substantial resources into a used-car business, including
purchasing the inventory on his line of credit. Now he claims that his business partner, Nate
Rolison, is keeping profits from that business that should be divided equally. Hinton sued
Rolison, seeking what he claims is his rightful share of those profits. Hinton also sought an
injunction against the financing company that was paying Rolison some of the disputed
profits.
¶2. Both Rolison and the financing company filed motions to dismiss. The trial court
granted Rolison’s motion based on res judicata and granted the finance company’s motion
finding Hinton had failed to state a viable claim. Finding that res judicata did not bar
Hinton’s claims against Rolison, and that Hinton failed to state a viable claim for injunctive
relief against the financing company, we affirm in part, reverse in part, and remand.
FACTS AND PROCEDURAL HISTORY
This Suit in Lamar County Circuit Court
¶3. On February 19, 2013, Clayton Hinton filed a complaint in Lamar County Circuit
Court against Nate Rolison—both individually and doing business as Lincoln Road
Autoplex—and NWEC, Inc.1 In the complaint, Hinton also sought an injunction to stop a
certain financing company, called Credit Acceptance Corporation, from paying any more
profits to Rolison.
¶4. Hinton claimed that he and Rolison had, in 2009, “entered into an Agreement titled
‘Lease of Property Agreement.’” Hinton claimed that Rolison had breached a provision of
the lease agreement that set out some terms of a business partnership. That provision
provided the following:
1
Unless otherwise noted, “Rolison” refers to Nate Rolison, Nate Rolison d/b/a
Lincoln Road Autoplex, and NWEC, Inc., collectively.
2
Nate Rolison, DBA Lincoln Road Autoplex and Clayton Hinton, being equal
partners, assuming responsibility for all debt, taxes, insurance and profits, not
limited to Auto Sales, including all back end profits defined as “pools” at
Lincoln Road Autoplex, assume equal personal responsibility for lease should
Lincoln Road Autoplex not be able to pay the lease.
The real property covered by the lease agreement was in Hattiesburg, but the used-car
business that Hinton and Rolison operated also had locations in Columbia and Laurel.
Hinton claimed he had “made substantial investments of resources including, but not limited
to[,] time, money/capital, expertise, and good will from the inception of the Agreement
through 2012, in support of the business venture.” Specifically, Hinton claimed that the
business had used Hinton’s line of credit to purchase its inventory. Hinton accused Rolison
of improperly distributing profits generated from the sale of that inventory.
¶5. Hinton also claimed that he and Rolison had “engaged Credit Acceptance to provide
financing to their customers.” Under that arrangement, Credit Acceptance would pay Hinton
and Rolison when their customers financed purchases through Credit Acceptance. Hinton
claimed that Credit Acceptance was paying those funds to Rolison, who was not distributing
to Hinton his share, and who was blocking Hinton’s access to the records and information
about the arrangement.
¶6. Hinton explained his request for an injunction against Credit Acceptance:
In order to preserve the status quo and prevent irreparable harm, Credit
Acceptance should be enjoined by a temporary restraining order and a
preliminary injunction from paying any further funds to Rolison Defendants
generated from the . . . business between Hinton and Rolison. Credit
Acceptance should be ordered to hold all such funds in trust, until final
judgment is rendered. Failure to hold all such funds in trust will result in
spending, using, wasting of the funds and prevent Hinton from being
compensated upon any future judgment of the Court finding Rolison in breach.
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¶7. Credit Acceptance moved to dismiss Hinton’s injunction request, arguing that
Mississippi Rules of Civil Procedure 12(b)(1) and 12(b)(6) and the priority-jurisdiction rule
mandated dismissal with prejudice. Credit Acceptance claimed that Hinton lacked standing
to sue it because he was not a party to the contract whereby it was paying the pool checks to
Rolison. It also argued that Hinton had “failed to state a claim for injunctive relief against
Credit Acceptance upon which relief can be granted.” Finally, it argued that, because a
previously filed lawsuit between Hinton and Rolison existed in chancery court at that time,
the priority-jurisdiction rule precluded the trial court from exercising jurisdiction over the
matter.2
¶8. Rolison also moved to dismiss Hinton’s claims, arguing that the priority-jurisdiction
rule should preclude Hinton’s maintenance of this suit, claiming that
Clayton Hinton’s Amended Complaint in the previously filed Chancery Court
Action alleges that the defendants to that action, including Nate Rolison,
breached a rental agreement covering property located at 4345 Lincoln Road
Extension. In the present action, Clayton Hinton has alleged Nate Rolison has
breached the same agreement, covering the same property.
The Previously Filed Case in Chancery Court
¶9. In that previously filed chancery action, Hinton and two of his adult children, Nathan
Hinton and Seneca Eubanks, had sued Rolison in Lamar County Chancery Court. They
alleged that Rolison had forged Seneca Eubanks’s and Nathan Hinton’s names in order to
fraudulently convey a parcel of land to himself and had stopped paying rent to Hinton on that
property. Hinton and his children sued to quiet title and to recover the unpaid rent. Hinton
2
Credit Acceptance was not a party to the lawsuit in chancery court.
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previously had conveyed the property to his children by warranty deed, but had himself
remained obligated on a note and deed of trust.
¶10. While the motions to dismiss were pending in circuit court, the parties reached a
mediated settlement of the chancery-court suit. The Memorandum Settlement Agreement
the parties signed stated that two other cases were being settled as well—one that was
pending in Lamar County Chancery Court, and one that was pending in Lamar County
Circuit Court. The parties listed the three settled cases by cause number and also expressly
excluded this case from the scope of the settlement, specifying that “[t]he only remaining
claims and causes of action among the parties are those contained in the Civil Action
identified as Clayton Hinton v. Nate Rolison, Individually; Nate Rolison d/b/a Lincoln Road
Autoplex; and Credit Acceptance Corporation, Inc.” There is no dispute that that language
referred to this suit.
¶11. Later, the parties also signed a Mutual Release Agreement. In it, they agreed that the
“disputes between the parties relate to that real property [at 4345 Lincoln Road Extension
in Hattiesburg].”(Emphasis added.) They also agreed “to resolve, settle and terminate all of
their disputes with respect to the ownership of the subject property and all of the claims and
counterclaims which were asserted in the referenced litigation, or could have been therein
asserted, which the Hinton parties and Rolison parties intend to be a complete accord and
satisfaction by and between them.”
¶12. By the Mutual Release Agreement, the parties specifically released one another from
“any and all claims, causes of action or other liability whatsoever arising in any manner from
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dealings . . . with respect to the real property situated in Lamar County, Mississippi . . . .”
(Emphasis added.) Finally, the agreement stated that the parties “do hereby expressly affirm
and ratify that certain Memorandum Settlement Agreement executed by and between them
on May 9, 2013, and further affirm and ratify their direction to their respective counsel . . .
to enter judgments of dismissal with prejudice of [the three cause numbers listed in the
Memorandum Settlement Agreement].”
¶13. The chancellor dismissed the suit with prejudice based on the parties’ settlement. The
judgment also noted that the chancellor would “retain jurisdiction of this matter for the sole
purpose of enforcing the May 9, 2013 Memorandum Settlement Agreement between the
parties.”
Rolison’s Amended Motion to Dismiss and Hearing in Circuit Court
¶14. Back in circuit court, Rolison amended his still-pending motion to dismiss in light of
the settlement and dismissal in chancery court, arguing that res judicata now barred Hinton’s
claims. Rolison claimed that the title-and-rent case settled in chancery court shared the
necessary identities with the partnership dispute here, and that “the specific claims asserted
in the present case were asserted in at least one of the three previous causes of action and a
Judgment of Dismissal with Prejudice has been entered.”
¶15. After a hearing, the trial court granted Rolison’s motion to dismiss, stating in his order
that
Hinton and Rolison have been involved in three other lawsuits involving
Lincoln Road Autoplex. The claims Hinton pled in this action are identical to
the claims he brought in one or more of those lawsuits that have been
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dismissed with prejudice. Accordingly, the claims Hinton exerts in the instant
case are barred by the doctrine of res judicata.
By the same order, the trial court dismissed Hinton’s claims against Credit Acceptance for
failure to state a viable claim for injunctive relief.
Hinton’s Motion for Reconsideration
¶16. At a hearing on Hinton’s motion to reconsider, Hinton argued that Rolison had
misrepresented which claims were settled and dismissed in the chancery-court action. Hinton
claimed that, contrary to what Rolison had represented to the trial court, “[t]his case and the
claims arising hereunder are separate and unrelated to prior claims between the parties.” He
also explained what the different claims were—a forged deed and unpaid rent in the chancery
case, and failure to distribute profits in this circuit-court case—and pointed out that the
parties specifically had excluded this action from the settlement and dismissal. Hinton
argued at the hearing that Rolison had misrepresented the terms of the settlement by not
attaching the most detailed recitation of those terms, the Memorandum Settlement
Agreement.
¶17. The trial court, however, placed more weight on general language in the Mutual
Release Agreement than the provisions of the Memorandum Settlement Agreement that
specified which suits were and were not being settled:
All I’m going by is that in the first and second paragraph of the mutual release
agreement, which is the best evidence, it says that the parties seek to resolve,
settle and terminate all their disputes with the ownership of the subject
property.
And I don’t know how differently I could see that if it was a court of equity or
if there were other circumstances. But under Rule 60, this Court must . . . find
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either that there was fraud or a mistake made or an accident. And the Court
does not find, based on even your testimony, that there was fraud, accident or
mistake of any kind made.
....
I do acknowledge the word “identical” is confusing in the order and stand
corrected on that . . . .
The trial court denied Hinton’s motion to reconsider without a written opinion, and now
Hinton appeals, raising two issues:
1. Did the circuit court err by finding that res judicata barred this auto
dealer partnership dispute due to a settled chancery case involving a
clouded title to real property?
2. Did the Complaint state a viable claim against Credit Acceptance?
STANDARD OF REVIEW
¶18. Whether to apply res judicata is a question of law, which we review de novo. Global
Oceanic Enter., Inc. v. Hynum, 857 So. 2d 659, 661 (Miss. 2003) (citing Saliba v. Saliba,
753 So. 2d 1095, 1098 (Miss. 2000)). We also review de novo the grant or denial of a motion
to dismiss. Strait v. McPhail, 145 So. 3d 664, 668 (Miss. 2014) (citing Scaggs v. GPCH-
GP, Inc., 931 So. 2d 1274, 1275 (Miss. 2006)).
ANALYSIS
I. Res judicata does not bar Hinton’s claims against Rolison.
¶19. “Generally, four identities must be present before the doctrine of res judicata will be
applicable: (1) identity of the subject matter of the action, (2) identity of the cause of action,
(3) identity of the parties to the cause of action, and (4) identity of the quality or character
of a person against whom the claim is made.” Anderson v. LaVere, 895 So. 2d 828, 832
(Miss. 2004) (quoting Dunaway v. W.H. Hopper & Assocs., Inc., 422 So. 2d 749, 751 (Miss.
8
1982)). When those identities are present, res judicata precludes “parties from litigating in
a second action claims within the scope of the judgment of the first action.” Anderson, 895
So. 2d at 832 (citing McIntosh v. Johnson, 649 So. 2d 190, 193 (Miss. 1995), overruled on
other grounds by Norman v. Bucklew, 684 So. 2d 1246 (Miss. 1996). The defendant bears
the burden of proving res judicata as a defense. Id. (citing Pate v. Evans, 97 So. 2d 737, 739
(Miss. 1957)).
¶20. Rolison argues that res judicata bars Hinton’s claims, but we find that this lawsuit was
not “within the scope of the judgment of the first action” because the parties agreed it would
not be. The Memorandum Settlement Agreement specifies that “[t]he only remaining claims
and causes of action among the parties are those contained in the Civil Action identified as
Clayton Hinton v. Nate Rolison, Individually; Nate Rolison d/b/a Lincoln Road Autoplex;
and Credit Acceptance Corporation, Inc.” That is this case.
¶21. Both the Mutual Release Agreement and the Judgment of Dismissal specify that the
Memorandum Settlement Agreement remained in force. In the Mutual Release Agreement,
the parties “expressly affirm[ed] and ratif[ied] that certain Memorandum Settlement
Agreement executed by and between them on May 9, 2013 . . . .” And in the Judgment of
Dismissal with Prejudice, the chancery court “retain[ed] jurisdiction of [that] matter for the
sole purpose of enforcing the May 9, 2013 Memorandum Settlement Agreement between the
parties.” Rolison has pointed to nothing in the record that contradicts the intent that was
reflected in the Memorandum Settlement Agreement and the Mutual Release Agreement, and
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which was confirmed in the Judgment of Dismissal. That is, Hinton and Rolison agreed that
they were not settling this case.
¶22. And we find additionally that Rolison is bound by that agreement, regardless of
whether the res judicata identities are present. Two principles of our law lead to this
conclusion. The first is that res judicata is an affirmative defense that may be waived. See,
e.g., Wholey v. Cal-Maine Foods, Inc., 530 So. 2d 136, 138 (Miss. 1988) (citing Bell v.
First Columbus Nat’l Bank, 493 So. 2d 964, 968 (Miss. 1986)). The second is that “we
apply contract law analysis to settlement agreements.” See, e.g., Chantey Music Publ’g.,
Inc. v. Malaco, Inc., 915 So. 2d 1052, 1056 (Miss. 2005) (citing East v. East, 493 So. 2d
927, 932–933 (Miss. 1986)). Within that analysis, “‘[t]he primary purpose of all contract
construction principles and methods is to determine and record the intent of the contracting
parties.” One South, Inc. v. Hollowell, 963 So. 2d 1156, 1162 (Miss. 2007) (quoting
Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So. 2d 107, 110 (Miss. 2005)).
¶23. We find the Eleventh Circuit’s opinion in Norfolk Southern Corp. v. Chevron U.S.A.,
Inc., 371 F.3d 1285 (11th Cir. 2004), instructive on how these two principles apply in the
settlement-agreement context. That court explained that when “the parties consent to . . . a
dismissal based on a settlement agreement . . . the principles of res judicata apply (in a
somewhat modified form) to the matters specified in the settlement agreement, rather than
the original complaint.” Id. at 1288 (emphasis added). This is due to res judicata being an
affirmative defense that can be waived:
When a defendant signs a settlement agreement stating that only some claims
will be precluded in the future, it is as if the defendant is preemptively waiving
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any potential res judicata defense he would have had as a result of the
dismissal to which the parties consent under the agreement. Thus, [a] . . .
settlement agreement may fairly be read as waiving certain res judicata rights
to which the dismissal would otherwise give rise.
Id. at 1289. Such a waiver can operate either inclusively or exclusively. That is, parties may
agree that “only some claims will be precluded in the future,” or they may “make[] an
‘express reservation’ of the right to sue on a particular claim in the future.” Id. “In both
cases, ‘the preclusive effect of the earlier judgment is determined by the intent of the
parties.’” Id. at 1289–90 (quoting Keith v. Aldridge, 900 F.2d 736, 740–41 (4th Cir. 1990)).
Courts focus on the parties’ intent because “a settlement agreement is essentially a contract
and is subject to the traditional rules of contract interpretation.” Id. at 1290 (citing Monaham
v. Comm’r, 321 F.3d 1083, 1068 (11th Cir. 2003)).
¶24. Here, the parties made their intent abundantly clear when they used a belt (only certain
suits were being settled) and suspenders (this suit was not being settled) to define the scope
of the settlement agreement. Thus we find that with regard to this lawsuit Rolison
“preemptively waiv[ed] any potential res judicata defense he would have had as a result of
the dismissal to which the parties consent[ed] under the agreement.” Id. at 1289. Rolison
does not claim that the Memorandum Settlement Agreement is unenforceable, nor does he
argue that this suit is not the suit that was excluded from that agreement; he argues that the
four identities are present and the claims should have been brought in the earlier action. But
this argument does him no good. Whether the identities are present or not, res judicata is no
longer available to him as a defense because he agreed it would not be. This issue is without
merit.
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II. Hinton is not entitled to injunctive relief against Credit Acceptance.
¶25. Before issuing a preliminary injunction, a trial court must find four things:
[That] 1) there exists a substantial likelihood that the plaintiff will prevail on
the merits; 2) the injunction is necessary to prevent irreparable harm; 3) the
threatened injury to the plaintiff outweighs the harm an injunction might do to
the defendants; and 4) granting a preliminary injunction is consistent with the
public interest.
Littleton v. McAdams, 60 So. 3d 169, 171 (Miss. 2011) (citing City of Durant v. Humphreys
Cty. Mem’l Hosp., 587 So. 2d 244, 250 (Miss. 1991); Miss. R. Civ. P. 65(a)). “Under
traditional rules of equitable relief, a plaintiff bears the burden of showing the need for
injunctive relief.” A-1 Pallet Co. v. City of Jackson, 40 So. 3d 563, 568 (Miss. 2010) (citing
Moore v. Sanders, 558 So. 2d 1383, 1385 (Miss. 1990)).
¶26. Hinton sought an injunction that would prevent Credit Acceptance from paying
Rolison because Hinton might some day win a judgment entitling him to those profits. He
did not allege any sort of contractual agreement with Credit Acceptance, or that Credit
Acceptance should be paying him the money it was paying Rolison. Hinton’s sole argument
for an injunction against Credit Acceptance is that Rolison should be sharing the money he
gets from Credit Acceptance because of Rolison’s agreement with Hinton.
¶27. “Mississippi courts ‘are not authorized to resolve every claim and dispute that may
arise between our citizens. The plaintiff must file a complaint which alleges some
cognizable claim or cause of action against the defendant.’ ” Greater Fairview Missionary
Baptist Church v. Hollins, 160 So. 3d 223, 229 (Miss. 2015) (quoting In re Bell, 962 So. 2d
537, 541 (Miss. 2007)). We find that Hinton has alleged no “cognizable claim or cause of
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action” against Credit Acceptance. Id. As a final note, the only harm Hinton has alleged is
a loss of money, and such a loss is reparable, not irreparable. Hinton’s damages suit against
Rolison implicitly acknowledges as much. This issue is without merit.
CONCLUSION
¶28. In sum, Rolison waived the affirmative defense of res judicata by agreeing that these
claims would survive the previous settlement and dismissal. As such, we reverse the Lamar
County Circuit Court’s dismissal of Hinton’s claims against Rolison and remand this case
for further proceedings. As for Credit Acceptance, Hinton failed to allege any legally
cognizable claim for injunctive relief, and we affirm the circuit court’s dismissal of that
claim.
¶29. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
WALLER, C.J., DICKINSON AND RANDOLPH, P.JJ., KITCHENS,
CHANDLER, PIERCE, KING AND COLEMAN, JJ., CONCUR.
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